Opec+ agrees fourth monthly oil output hike since Hormuz disruption

ISLAMABAD: Opec+ on Sunday approved a fourth successive increase in oil output targets, even as the war between the United States and Iran continues to restrict several members from raising actual supply because of disrupted flows through the Strait of Hormuz.

Seven core members agreed to raise production targets by 188,000 barrels per day from July. The increase matches the revised June adjustment and follows earlier monthly quota rises of 206,000 bpd in April and May. The June figure was lowered to reflect the United Arab Emirates’ departure from Opec.

The group’s latest move comes as the closure of the Strait of Hormuz has sharply reduced exports from Gulf producers. Opec figures show the alliance’s production fell to an average of 33.19 million barrels per day in April, down from 42.77 million bpd in February.

Jorge Leon, an analyst at Rystad and a former Opec official, said the quota increase would have little immediate practical effect while the shipping route remains shut. “An Opec+ production increase means very little while the Strait of Hormuz remains closed,” said Jorge Leon, an analyst at Rystad and a former Opec official. “When the Strait of Hormuz reopens, the market could move very quickly from fear of shortage to fear of surplus.”

Output policy and remaining cuts

The seven countries are raising output as part of a phased rollback of a 1.65 million bpd production cut agreed in 2023, when the UAE was still part of the group. Reuters calculations said that, from July, about 567,000 bpd of that original reduction would still remain to be restored to the market after accounting for the UAE’s exit on May 1.

If Opec+ continues with monthly increases of roughly 188,000 bpd in August and September, the remaining portion of that cut would be fully unwound by the end of September.

The seven countries that took Sunday’s decision were Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman. In recent years, those states, along with the UAE before its withdrawal, have led the group’s production policy decisions.

Separate meeting leaves broader policy unchanged

In a separate meeting involving all 21 Opec+ members, ministers left the wider group production policy unchanged through the end of 2026, according to another Opec statement.

The alliance is also conducting a review of members’ oil production capacity that will be used as a reference point for 2027 production baselines, from which quotas are set. Opec+ said on Sunday that ministers reaffirmed the importance of completing that assessment.

Oil prices had fallen to around $93 a barrel on Friday as traders grew more confident that the chances of renewed conflict between Washington and Tehran were receding. Before the war began, prices were near $72 a barrel.

The pressure on Opec+ has intensified further after the UAE left the Organization of the Petroleum Exporting Countries following nearly 60 years of membership.